HEI for Debt Consolidation: How It Works in 2026

Using a home equity investment (HEI) for debt consolidation means paying off high-interest balances with a lump sum from your home equity, without adding a new monthly payment. An HEI has no stated interest rate or required monthly payment, but it is not cost-free. You settle with the HEI company when you sell, buy out the agreement or reach the end of the term, and the amount is based on your home’s value or change in value.

The trade-off is cost and risk. If your home’s value rises, the settlement generally rises with it, and the HEI company holds a lien on your home until you settle. If you cannot pay the settlement when due, you may have to sell your home or face foreclosure.

In this article. (Skip to...)

• What is a home equity investment?
• How an HEI works for debt consolidation
• Who should consider an HEI for debt consolidation?
• When is an HEI not the best option?
• HEI qualification requirements
• How an HEI compares to other debt consolidation options
• Pros of using an HEI for debt consolidation
• Cons and risks of using an HEI for debt consolidation
• Is an HEI the right choice for your debt payoff goals?
• FAQs about using an HEI for debt consolidation

What is a home equity investment?

A home equity investment (HEI) gives you a lump sum of cash based on your home’s equity. It has no stated interest rate or required monthly payment. Instead, the HEI company receives an amount based on your home’s value or change in value when you sell, buy out the agreement or reach the end of the term.

Terms often run 10 to 30 years, according to the Consumer Financial Protection Bureau (CFPB). Hometap and Unlock use 10-year terms, and Point uses a 30-year term. HEIs are also called home equity agreements (HEAs) or shared equity agreements. Your settlement depends on the contract’s formula, including your home’s value and applicable adjustments; you may owe more than you received even if your home loses value.

How are HEIs different from home equity loans?

• No required monthly payment. You make no monthly payments to the HEI company. Your mortgage and other housing costs continue.
• No stated interest rate, but not cost-free. Instead of charging interest, the company takes a share based on your home’s value or change in value, and fees may apply.
• Settlement based on home value. What you pay at the end is set by your contract and based on your home’s value or change in value. If your home appreciates, the amount generally rises.
• Settlement timing. You settle when you sell, buy out the agreement or reach the end of the term. Refinancing may help fund settlement, subject to lender and contract requirements. Other events specified in your contract, such as default, may require earlier settlement.

The main cost is the share of your home’s future value you give up. If your home appreciates significantly, the settlement could cost more than the interest on a home equity loan or HELOC. In its January 2025 report on home equity contracts, the CFPB said that under many contracts the settlement amount grows at a rate of 19.5% to 22% per year in the early years, which it called substantially higher than interest rates on most home-secured credit.

How an HEI works for debt consolidation

A home equity investment helps with debt consolidation by turning part of your home equity into a lump sum you can use to pay off high-interest balances at once. Instead of replacing those debts with a new monthly loan payment, you settle the HEI later, when you sell, buy out the agreement or reach the end of the term.

Credit card debt is the usual target. Interest rates on credit card accounts assessed interest averaged 22.36% in August 2026 (a preliminary figure), according to the Federal Reserve. The CFPB reports that consumers primarily use home equity contracts for debt consolidation and home improvements. Paying off cards with an HEI removes those monthly payments, but the debt is replaced by a settlement secured by a lien on your home, and its cost depends on what your home is worth later.

How the HEI process works

1. Apply with an HEI company. Approval depends largely on your home equity and property, and you may qualify with a lower credit score than many lenders require.
2. Receive a lump sum. Timing varies: Point says it can close in as little as three weeks, and Hometap says funding can take as little as 30 to 45 days.
3. Use the funds to pay off credit cards, personal loans, or other high-interest debts in full.
4. Stop making monthly payments on the debts you paid off. Your mortgage and other housing costs continue.
5. Settle with the HEI company when you sell, buy out the agreement or reach the end of the term. The amount is based on your home’s value or change in value, and refinancing may help fund settlement.

Who should consider an HEI for debt consolidation?

An HEI may be suitable for homeowners with substantial equity who face high monthly debt payments or limited cash flow. It is particularly relevant for those unable to qualify for a HELOC or home equity loan because of bad credit, income or debt-to-income limits; Hometap and Unlock, for example, say they have no income or debt-to-income requirements. An HEI may reduce monthly debt payments, but it creates a settlement obligation secured by your home. Upfront fees can make a short holding period costly; staying longer does not guarantee lower total costs or make an HEI suitable. Compare settlement estimates at different dates and home values, and plan how you would pay.

When is an HEI not the best option?

An HEI may not be the best choice if you qualify for lower-cost alternatives, such as a HELOC or home equity loan with a fixed rate and payment. It may also be a poor fit if you expect your home to appreciate significantly, since the settlement generally rises with your home’s value. Homeowners planning to sell soon or those who prefer fixed, transparent costs may find the settlement structure less appealing. If spending caused the debt, consolidation alone may not fix it. Compare the total cost of each option, including how a HELOC for debt consolidation would handle the same balances.

HEI qualification requirements

HEI companies generally have more flexible requirements than traditional lenders, but you’ll still need to meet specific criteria:

• Home equity: Requirements vary by company. Hometap looks for at least 25% equity, Point usually requires you to keep 29% or more after its investment, and Unlock requires at least 30%.
• Credit score: Point accepts credit scores starting at 500. Unlock accepts scores starting at 500 for single-family homes and townhomes used as primary residences; its minimum is 550 for condos, two-to-four-unit properties, investment properties and second homes. Hometap requires 575, and Unison lists 620. Meeting the minimum credit score does not guarantee approval; property, equity and other underwriting requirements apply.
• Property type: Some companies accept more than primary residences. Hometap invests in vacation and rental properties, and Unlock accepts second homes and investment properties.
• Home condition: Your property typically needs to meet certain standards and may require an appraisal.
• Location: Not all HEI companies operate in every state, so availability varies by where you live.

How an HEI compares to other debt consolidation options

An HEI is one of several ways to use home equity for debt consolidation. Every home-secured option puts a lien on your home, and none guarantees savings. The table compares how each option is repaid, what it costs and the main risk.

The table describes typical fixed-rate home equity loans and unsecured fixed-rate personal loans; actual terms vary.

Pros of using an HEI for debt consolidation

• No required monthly payment to the HEI company, so paying off high-interest debts can lower your monthly obligations.
• Flexible credit and income requirements, since companies weigh home equity and the property more heavily. You may qualify with a lower credit score than some home equity loans or HELOCs require.
• A single lump sum that can pay off several debts at once.
• No stated interest rate, though an HEI is not cost-free: settlement is based on your home’s value or change in value, and under many contracts it can grow quickly in the early years.
• Simplified finances by replacing several creditors with one future settlement obligation.

Cons and risks of using an HEI for debt consolidation

• Sharing future home appreciation, which can significantly increase what you repay if property values rise.
• Potentially higher total cost than a fixed-rate loan, especially in strong housing markets.
• A single large payment when you sell, buy out the agreement or reach the end of the term. Refinancing may help fund settlement, but a new loan is not guaranteed.
• Reduced home equity over time, which can limit future borrowing or financial flexibility.
• Uncertain final payoff amount, since total cost depends on future home value rather than a fixed balance.
• A lien on your home. The company secures its interest with a lien, and the CFPB says homeowners who cannot pay the full settlement at the end of the term risk having to sell their home or face foreclosure.

Is an HEI the right choice for your debt payoff goals?

A home equity investment can be a practical solution for homeowners seeking cash flow relief who cannot or prefer not to qualify for traditional debt products. Having no required monthly payment is the main appeal for those managing high-interest debt.

However, the trade-off is significant. You are exchanging potential future appreciation for immediate financial relief. For some homeowners, this is a reasonable compromise, while others may find a home equity loan or HELOC more cost-effective in the long term.

Before you sign, ask each HEI company for its settlement estimate under a few home price scenarios, including no change and strong appreciation, and compare it with the total interest and fees on a loan for the same amount. This guide to the true cost of a home equity investment shows how to run those numbers.

FAQs about using an HEI for debt consolidation